That puts PepsiCo Inc. (NYSE: PEP) in an excellent spot as one of
the largest consumer staples companies in the world and primes them for continued future growth.
I would guess
large consumer staples companies continue to underperform, as fund managers transition to «growthier» names.
Not exact matches
For stocks, it's important to have stocks in your portfolio from a
large variety of
companies, including
companies in different sectors or industries, such as
consumer staples or materials; from
companies of different sizes, such as
large - cap or small - cap stocks; from
companies in different countries and from
companies that either have growth potential or good dividend yields.
They ranked low on the Standard & Poor's 500 Composite Index: Energy shares sank 5.9 %, on average, while materials sector stocks collectively shed 5.5 % of their value; among the nine other equity sectors, only telecommunication services and
consumer staples companies posted
larger losses.1
Large - cap
consumer staples companies are trading at an 11 % discount to the S&P 500.
The
company, Britain's
largest retailer, announced earlier this week that it was cutting the price of a four pint (2.27 litres) bottle of milk from # 1.39 ($ 2.32, $ 1.69) to # 1 ($ 1.67, $ 1.22) as part of drive to reduce the amount paid by
consumers for
staples.
And it's hard to believe that even in the worst of economic depressions that the
largest companies in the food,
consumer staples, railroad, utility, healthcare, and banking industries will suddenly become unprofitable and no longer have the money to pay and raise those dividends.
When looking at
consumers staples, look at
companies that have a
large assortment of products in different sectors of
consumer goods — P&G is a good example.
The chart below shows illustrates this with the
consumer staple companies (Coke, Pepsi, Colgate, and Procter & Gamble) having much
larger payout ratios than cyclical business (Dow and Deere) and growth
companies (Visa and Roper).
We can see this dynamic by comparing the free cash flow payout ratios of a few different
consumer staple companies to cyclical businesses and
companies with
large investment opportunities.